CONSUMER
BEHAVIOUR AND MARKETING STRATEGY
by
J.
Paul Peter & Jerry C. Olson
Fifth
Edition
Irwin
McGrawhill Companies
Copyright
1999
United
States
CHAPTER II: A FRAMEWORK
FOR CONSUMER ANALYSIS
Buying a Smith &
Wesson
Barbara Linton is 37,
divorced and the mother of two daughters Joanne and Jenny ages 7 and 9 she is a
successful doctor and makes over $ 90,000 annually. She lives in her own home
in a Chicago suburb with her children, who go to private schools. Recently a
number of robberies and burglaries have occurred close to her neighbor hood.
One of her friends was attacked in a mall parking lot and robbed. Barbara is
concerned about her safety and that her children and is considering buying a
gun for home protection. However, she is worried about the safety of having a
loaded gun in her home with the kids around.
Barbara’s uncle owns a
gun store and shooting club in her hometown near Minneapolis. She decides to
visit him at the store and evaluate further the pros and cons of getting a gun
on her next trio home.
After the 10 o’clock
news report on another robbery in her area, Barbara decides to take the kids
and fly home to see her family the following weekend. While there she goes to
see her uncle at his shop.
“Hi Uncle Al,” she
greets him, “How is the gun business?”
Uncle Al replies that
the gun business is doing fine. He says the shooting club is also doing well
and has lots of new members.
Barbara explains that
she is thinking about buying a gun because of all the crime recently in her
area. She also explains her concerns with the safety of having a gun around the
house.
Uncle Al tells her he
does not want to try to influence her decision. He believes people have to
decide for themselves whether owning a gun is right for them. However, if they
do choose to buy one they need to learn how to load and fire it safely and
effectively. He also says a gun lock that can be put on the trigger housing can
be used to avoid problems with the children.
Barbara decides to buy
a gun for her home. She asks her uncle to recommend the best model for her
needs.
Uncle Al tells her he
thinks a revolver is much simpler to operate and safer to handle than an
automatic. He recommends a smith & Wesson Model 686 stainless steel
revolver with a 4 inch barred and black rubber Pachmeyer grips for better
handling.
Although the Model 686
handless 357 caliber ammunition, 38 special cartridges can also be used in it.
He recommends using the 38s at first because they produce less recoil when
fired and then stepping up to the 357s when her skills develop because they
have more stopping power.
Barbara and her uncle
walk over to the shooting range with his Model 686. He explains how to load the
revolver and how to shoot it in both single and double action. He also shows
her a trigger lock and how to put it on the gun. Barbara loads the gun and
tries it out at the range. She is surprised how easy it is to shoot and hit a
silhouette target at 25 feet. She thinks the gun looks and feels good and would
be right for her needs.
Her uncle cannot sell
her are because she is no longer a resident of Minnesota, so she purchases a
Model 686 when she returns to Chicago. She also buys rubber grips, two boxes of
38 special cartridges a Kolpin gun case and a trigger lock for the gun. She joins
an upscale shooting club to improve her skills and to meet other people who
face the same problems she does. She feeis safer in her home.
What factors are
involved in the purchases made by Barbara Linton? Many theories, models and
concepts have been borrowed from other fields and developed by marketing
researches in attempts to understand consumer behavior. In many cases, these
ideas overlap and even compete with each other as useful descriptions of
consumers. To date, no one approach is fully accepted nor it is likely that a
single, grand theory of consumer behavior can be devised that all researches
would agree on.
However, in this
chapter we present a framework for researching, analyzing and understanding
consumers to help marketers develop more effective strategies. The framework is
a general one that cab used to analyze any consumer behavior issue facing
marketers, from developing new products and services to improving strategies
for existing products and services. It can be used to aid nonprofit organizations
in developing exchanges with consumers, including donations and use of
nonprofit services, such as museums and libraries. The framework also provides
the organizational structure for this book.
The chapter begins by
introducing three elements that should be researched and analyzed to develop
effective marketing strategies. There are (1) consumer affect and cognition,
(2) consumer behavior and (3) consumer environments. The special relationships
among these and the role of consumer research and analysis in developing
marketing strategies is then discussed. This is followed by a discussion of
marketing strategy the stimuli placed in the environment to influence
consumers. The chapter concludes with a discussion of four levels of consumer
analysis.
Exhibit 2.1
Three Elements for
Consumer Analysis
Three Elements for
Consumer Analysis
Exhibit 2.1 presents
three elements for consumer analysis and relationships among them. Each of the
three elements is critical for developing a complete understanding of consumers
and selecting of consumers and selecting strategies to influence them.
Consumer Affect and
Cognition
Consumer affect and
cognition refer to two types of mental response consumers have to stimuli and
events in their environment. Affect refers to their feelings about stimuli and
events, such as their beliefs about a particular product.
Affective responses can
be favorable or unfavorable and vary in intensity. For instance, affect
includes relatively intense emotions such as love or anger, less strong feeling
states such as satisfaction or frustration, moods such as boredom or relaxation
and milder overall attitudes such as liking Mc Donald’s French fries or
disliking Bic pens. Marketers typically develop strategies to create positive
affect for their products and brands to increase the chances that consumers
will buy them.
Cognition refers to the
mental structures and processes involved in thinking understanding and
interpreting stimuli and events. It includes the knowledge meaning and beliefs
that consumers have developed from their experiences and have stored in their
memories. It also includes the processes associated with paying attention to
understanding stimuli and events, remembering past event, forming evaluation
and making purchasing decisions and choices. Although many aspects of cognition
are conscious thinking process, others are essentially automatic. Marketers
often try increase consumers attention to products and their knowledge about
them. For example, Volvo ads often feature detailed information about the
construction of the cars to make them safer in order to increase consumer’s
knowledge and the chances that they will buy them.
Section 2 of this text
offers a detailed treatment of consumer affect and cognition and explains the
importance of understanding them for developing marketing strategies. Highlight
2.1 offers a sample of the types of questions section 2 is designed to answer.
Consumer Behavior
In this text, behavior
refers to the physical actions of consumers that can be directly observed and
measured by others. It is called overt behavior to distinguish it from mental
activities, such as that cannot be observed directly. Thus, a trip to the Gap
at the mall involves behavior; deciding whether to go there is not an overt
behavior because it cannot be observed by others. Examples of behaviors include
shopping at stores or an Internet, buying products, or using credit cards.
Highlight 2.1
Some Basic Questions
about Consumer Affect and Cognition
Although many competing
theories and ideas about consumer affect and cognition have been proposed, no
single theory completely describes the workings of the consumer’s mind.
However, carefully studying and thinking about the information in Section 2 of
this text should help you develop informed answers to questions about affect
and cognition such as the following:
1. How
do consumers interpret information about marketing stimuli such as products,
stores and advertising?
2. How
do consumers choose from among alternative products classes, product and
brands?
3. How
do consumers form evaluations of products and brands?
4. How
does memory affect consumer decision making?
5. How
do affect and cognition influence behavior and environments?
6. How
do behavior and environments influence affect and cognition?
7. How
do consumers interpret the benefits of marketing offerings?
8. Why
consumers are more interested or involved in some products or brands than
others?
9. How
do marketing strategies influence consumers’ affective and cognitive responses?
10. How
do affective and cognitive responses influence each other?
Behavior is critical
for marketing strategy because it is only through behavior that sales can be
made and profit can be earned. Although many marketing strategies are designed
to influence consumers affect and cognition these strategies must ultimately
result in overt consumer behavior for them to have value for the company. Thus
it is critical for marketers to analyze, understand and influence overt
behavior. This can be done in many ways including offering superior quality
(Toyota), lower prices (Circuit City), greater convenience (Peapod online
groceries), easier availability (Coke is sold in millions of stores and vending
machines) and better service (Briggs & Stratton lawnmower engines are
serviced at 25,000 locations). Marketers can also influence overt behavior by
offering products, stores and brands that are trendier (The Gap), sexier
(Calvin Klein jeans), more popular (Nike) and prestigious (Mont Blance pens)
than competitive offerings.
Section 3 of this text
is devoted to a discussion of overt consumer behavior. Highlight 2.2 offers a
sample of the types of questions Section 3 is designed to answer to aid in
developing successful marketing strategies.
Consumer Environment
The consumer
environment refers to everything external to consumers that influence what they
think, feel and do. It includes social stimuli, such as the actions of others
in cultures, subcultures, social classes, reference groups and families that
influence consumers. It also includes other physical stimuli, such as stores,
products, advertisement and signs that can change consumers thought feeling and
actions.
The consumer
environment is important to marketing strategy because it is the medium in
which stimuli are placed to influence consumers. For example, marketers run
commercials during shows that their target markets watch in order to inform,
persuade and remind them to buy certain products and brands. Marketers can send
free samples, coupons, catalogs and advertisement by mail to get them in the
proximity of consumers. Web sites become part of a consumer’s environment if
they are contacted.
Section 4 of this text
discusses the environment and its influence on consumers. Highlight 2.3 offers
a sample of the types of questions. Section 4 is designed to answer.
Highlight 2.2
Some Basic Questions
about Consumers Behaviors
Although little
attention has been given to studying the overt behavior of consumers, many behavior
influence techniques seem to be commonly used by marketing practitioners.
Carefully studying and thinking about the information in Section 3 of this text
should help you develop informed answers to questions about behavior such as
these:
1. How
do behavior approaches differ from affective and cognitive approaches to
studying consumer behavior?
2. What
is classical conditioning and how it used by marketers to influence consumer
behavior?
3. What
is operant conditioning and how it is used by marketers to influence consumer
behavior?
4. What
is vicarious learning and how is it used by marketers to influence consumer
behavior?
5. What
consumer behaviors are of interest to marketing management?
6. How
much control does marketing have over consumer behavior?
7. How
do and affect and cognition and environments affect behavior?
8. How
does behavior influence affect ,cognition and environment?
9. How
can behavior theory be used by marketing managers?
10. Does
the frequency and quality of consumer behavior vary by individuals, products and
situations?
Relationships among
Affect, Cognition, Behavior and the Environment
In Exhibit 2.1 each of
the three elements is conducted by a two headed arrow signifying that any of
them can be either a cause or an effect of a change in the either element. For
Example, a consumer might see an ad for a new laundry detergent that promises
to clean clothes better than Tide. This ad might change what the consumer
thinks about the new brand and lead to a purchase of it. In this case a change
in the consumer’s environment (the ad for new detergent) led to a change in
cognition (the consumer believed the new detergent was better), which led to a
change in behavior (the consumer bought the new brand).
A change in laundry
detergent purchase and use could come about in other ways, however. For
example, a consumer could receive a free sample of a new liquid detergent in
the mail, try it out, like it and purchase it after that. In this case a change
in the consumer’s environment (the free sample) led to a change in behavior
(use and purchase), which led to a change in the consumers affect and cognition
(liking the new brand).
Another possibility is
that a consumer might be dissatisfied with his/her current brand of laundry
detergent. On the next trip to the grocery store, the consumer inspects other
brands and selects one that promises to get white clothes whiter. In this
example, a change in affect and cognition (dissatisfaction) led to a change in
the consumers environment (inspecting other brands), which led to a change in
behavior (purchase of a different brand).
Although changes can
occur in other ways, these examples serve to illustrate our view of consumers.
Namely, that consumer processes not only involve a dynamic and interactive
system, but also represent a reciprocal system. A reciprocal system is one in
which any of the elements could be either a cause or an effect of a change at
any particular time. Affect and cognition can change consumers affect,
cognition and environments. Environments can change consumer’s affect,
cognition and behavior.
There are five
implications to viewing consumer processes as reciprocal system involving affect
and cognition, behavior and the environment. First, any comprehensive analysis
of consumers must consider three elements and the relationships among them.
Descriptions of consumers in terms of only one or two of the elements are
incomplete. For example to assume that affect and cognition always cause
behavior and ignore the impact of environment underestimates the dynamic nature
of consumption processes. Similarly to assume that the environment controls
behavior without consideration of affect and cognition also gives an incomplete
description. The development of marketing strategies should include an analysis
of all three elements, their relationship and the direction of causal change at
particular times.
Second, it is important
to recognize that any of the three elements may be the starting point for
consumer analysis. Although we think that marketing strategist should start
with an analysis of the specific overt behaviors consumers must perform to
achieve marketing objectives, useful analyses could start with affect and
cognition by searching think and feel about such things as the various brands
of a product. Alternatively the analysis could start with consumer’s
environments by examining changes in their world that could change their
affect, cognition and behavior. However regardless of the starting point all
three elements and their relationships should be analyzed.
Third because this view
is dynamic, it recognizes that consumers can continuously change. Although some
consumers may change little during a particular time period, others may
frequently change their affect, cognition, behavior and environments. Thus
keeping abreast of consumers involve continues research to detect changes that
could influence marketing strategies.
Fourth although our
example focused on a single consumer, consumer analysis can be applied at
several levels. It can be used to analyze not only a single consumer, but also
groups of consumers that make up a target market a larger group of consumers
made up of all the purchasers of a product in an industry or an entire society.
Because marketing strategies can be applied at all of these levels, this
approach is useful for all types of marketing issues, as discussed at the end
of this chapter.
Finally this framework
for analyzing consumers highlights the importance of consumer research and
analysis in developing marketing strategies. As shown in Exhibit 2.2, consumer
research and analysis should be key activities for developing marketing
strategies. Consumer research includes many types of studies such as test
marketing, advertising pretest, sales promotion effects, analysis of sales and
market share data, pricing experiments, traffic & shopping patterns, brand
attitude & intentions and many others.
Highlight 2.3
Some Basic Questions
about Consumer Environments
Environmental
psychology seeks to extend knowledge about the relationships between
environmental stimuli and human behavior. In consumer research the major
environmental factors examined have been concerned with the impact of various
societal aspects. Carefully studying and thinking about the information in
Section 4 of this text should help you develop informed answers to these
questions about the environment:
1. In
what physical environments do consumer behavior occurs?
2. How
do environments affect consumers affect, cognition and behavior?
3. How
do consumer affect, cognition and behavior affect the environment?
4. What
effect does culture have on consumers?
5. What
effect does subculture have on consumers?
6. What
effect does social class have on consumers?
7. What
effect do reference groups have on consumers?
8. What
effect do families have on consumers?
9. In
what ways do consumers influence each other concerning marketing offerings?
10. How
powerful are interpersonal influences on consumer behavior?
Exhibit
2.2
The
Role of Consumer Research and Analysis in Marketing Strategy
Exhibit 2.3
The
Wheel of Consumer Analysis
A logical
sequence is to first research and analyzes what consumer think, feel and does
relative to a company’s offerings and those of competitors. In addition an
analysis of consumers’ environments is called for to see what factors are
currently influencing them and what changes are occurring. Based on this
research and analysis a marketing strategy is developed, which involves setting
objective, specifying an appropriate target market and developing a marketing
mix (product, promotion, price, place) to influence it. After the target market
has been selected based on careful analysis of key differences in groups of
consumers, marketing strategies involve placing stimuli in the environment that
will hopefully become part of the target markets environment and ultimately
influence it members behavior.
Consumer research and
analysis should not end when a strategy has been implemented, however. Rather
research should continue to investigate the effects of the strategy and whether
it could be changed to be more effective. For example, although Arizona
Beverages implemented a successful strategy for its selling products, it tried
to increase its market share by using squeezable sports bottles with a nozzle
just like that one athletes use to guzzle on the run. Thus marketing strategy
should involve a continuous process of researching and analyzing consumers and
developing, implementing and continuously improving strategies.
Marketing Strategy
From a consumer
analysis point of view, a marketing strategy is a set of stimuli placed in
consumers environments designed to influence their affect, cognition and
behavior. These stimuli include such things as products, brands, packaging,
advertisements, coupons, stores, credit cards, price tags, and sales people’s
communication and in some cases, sounds (music), smells (perfume) and other
sensory cues.
Exhibit 2.3 presents
our complete framework, which we call the Wheel of consumer analysis. It is a
wheel because it is constantly rotating with changes in consumers and in
marketing strategy. Marketing strategy is treated as the hub of the wheel
because it is a central marketing activity and is designed by marketing
organizations to influence consumers.
Clearly marketing
strategies should be designed not only to influence consumers but also to be
influenced by them. For example, if research shows that consumers are disgusted
(affect and cognition) with the advertisements for Calvin Klein jeans, the
company may want to change its ads to better appeal to the market. If research
shows that consumers in the target market do not shop (behavior) in stores
where a company’s product is featured, then the distribution strategy may have
to be changed. If research shows that consumers want to able to get information
from a company’s web page (environment) and none exist, the company may want to
create one. Thus marketing strategies should be developed, implemented and
changed based on consumer research and analysis.
Section 5 of this text
is devoted to a discussion of marketing strategy. Although the entire text
focuses on applying consumer analysis to marketing strategy issues, section 5
focuses specifically on market segmentation and each of the elements of the
marketing mix product, promotion and place (channels of distribution).
Highlight 2.4 offers a sample of the types of questions Section 5 is designed
to answer.
Highlight 2.4
Some Basic Questions
about Marketing Strategy and Consumers
Consumers are the focal
point in the development of successfulness marketing strategies. Marketing
strategies both influence and are influenced by consumers affect and cognition,
behavior and environment. Carefully studying and thinking about the information
in section 5 of this text should help you developed informed answers to
questions about marketing strategies such as the following:
1. What are some
effective ways to segment markets?
2. How can products be
effectively positioned?
3. What are the relationships
between product strategies and consumers?
4. What are the
relationships between promotion strategies and consumers?
5. What are the
relationships between channels of distribution and consumers?
6. What are the
relationships between pricing strategies and consumers?
7. What consumer
variables affect the success of a marketing strategy?
8. How can a firm
develop brand loyal consumers?
9. What is the role of
consumer role satisfaction in developing successful market offerings?
10. How does non store
consumer behavior differ from that in stores?
Levels of Consumer
Analysis
As noted, consumer
research and analysis can be conducted at several different levels. The wheel
of consumer analysis is a flexible tool that can aid in understanding different
societies, industries, market segments or individual consumers. It can be used
fruitfully by both marketing strategist and public policy officials to
understand the dynamics that shape each of these levels.
Societies
Changes in what a
society believe and how its members behave can be analyzed with the wheel of
Consumer Analysis. For example, a recent change in our society involves greater
concern with health and fitness. How did this change occur? Surely, consumers
were always concerned with living long happy lives. A growing body of medical
research indicated people could be healthier and live longer if they ate
properly and exercised regularly. This research may have changed attitude of
some consumers about their eating and exercise habits. As these consumers, particularly
on the West Coast, changed their attitudes and began living more healthful
lifestyles, many the other consumers copied these beliefs and behavior
patterns. In addition healthy well shaped people are considered more attractive
in our society. This belief may have accelerated the health and fitness
movement. Also, because a variety of health related industries, such as health
foods, exercise equipment and sports apparel, developed and promoted proper
eating habits and regular exercise, consumers were increasingly exposed to the
concept and effects of an active lifestyle.’
Of course, not everyone
in society has changed his or her lifestyle and some who did reverted to less
healthful habits. However the brief discussion here shows changes in the environment
(medical research reports), cognition and affect (beliefs about how to live
longer and healthier), behavior (eating healthful foods and exercising) and
marketing strategies (development and promotion of health food, exercise
equipment and apparel products) that interacted to create this change in
society in general. The Wheel of Consumer Analysis can account for these
changes in our society and can also be applied to other societies to help
explain their structures and practices.
Industries
The Wheel of consumer
Analysis can be used to analyze the relationships of a company and its
competitors with consumers in specific industries. For example, consider the
effect of health concerns on the beer industry. Lite beer from Miller took
advantage of the health movement and created the market for reduced calorie
beer. Miller Brewing Co. became the light beer market leader by being the first
to offer a product that was more consistent with a change occurring in society
and it also through developing and marketing the product, helped accelerate the
change. Thus, a change in consumer beliefs and behavior concerning calorie
intake influenced a marketing strategy to introduce and spread the change in
consumer beliefs and behaviors. The success of the product influenced
competitors to also offer light beers, further changing demand for this product
category.
However another change
in this industry is the concern with responsible drinking, which decreases
demand alcohol products in general. This change has led to the development and
marketing of nonalcoholic beers and for many consumers, abstinence from any
alcoholic beverages. Consumer groups, such as Mothers against Drunk Driving and
students against drunk driving, have also influenced many members of society to
reduce their alcohol consumption. Although being drunk and boisterous was
considered acceptable behavior a few years ago, many consumers no longer find
it so. Similarly, smoking was at one time considered a sign of maturity and
being cool, whereas today fewer and fewer public places tolerate smoking.
At the end industry
level, changes in consumer cognition, affect and behavior can threaten existing
products and can also offer opportunities to develop products more consistent
with new values and behaviors can threaten existing products and can also offer
opportunities to develop products more consistent with new values and
behaviors. Successful marketing strategies depend on analyzing consumer product
relationships not only for the company’s products, but also for those of
competitors and creating an advantage over competitive offerings.
Market Segments
The Wheel of Consumer
Analysis can be used to analyze groups of consumers who have some similarly in
cognition, affect, behavior and environment. Successful firms in an industry
usually divide the total market into segments and try to appeal most strongly to
one or more of them. For example, the
emphasis on health encouraged many consumers to become involved in sports. However,
specific shoes designed to play each sport effectively were not always
available. Today, consumers can find many varieties and styles of shoes for
running, bicycling, soccer, basketball and other sports. These shoes vary in
design, features and price ranges to appeal to groups of consumers that are
similar in some ways.
Reebok for example
developed its Blacktop shoe for young basketball players on urban outdoors
courts. The shoe is a few ounces heavier than those of competitors, moderately
priced and designed for performance on asphalt and concrete. The shoe looks
good so it appeals to the 80 percent of consumers who buy athletic shoes solely
for fashion, but it also is tough enough to stand up to rugged outdoor play.
The shoe was sold out in many stores in its first two months and was expected
to sell over 2.2 million pairs in its first year, a smashing marketing success.
Thus by understanding the wants and preferences (cognition and affect) of urban
youths (target market) for a good looking, moderately priced, long wearing
shoe, promoted regular guys who play basketball (behavior) on outdoors courts
(environment), Reebok developed a successful marketing strategy.
Individual Consumers
Finally, the Wheel of
Consumer Analysis can be used to analyze consumption history, a single
purchase, or some aspect of a purchase for a specific consumer. Lands End a
catalog marketer carefully analyzes individual consumers in terms of their
previous purchasing history. The company can then target individual consumers
with specialty catalogs of the types of merchandise previously bought. To
understand Barbara Linton’s purchase of a Smith & Wesson handgun, we need
to consider her affect, behavior, cognition and environment.
Buying a Smith &
Wesson
This case provides a
simple description of the purchase of a gun and accessories. We hope it is
written in such a manner that you can easily understand the sequence of events.
However, imagine how difficult it would be to try to describe these events by
considering only cognitive and affective or behavioral or environmental
factors.
Cognitive and affective
factors, such as Barbara concerns for her family’s safety, her information
processing and decision making to buy a gun and her feelings of greater safety,
are useful but they alone could not explain what Barbara did and environmental
factors that influenced these thought and actions. Her overt behavior, such as
visiting her uncle, trying the gun and purchasing the gun and equipment, is
also helpful but is incomplete for capturing the meaning of the behavior and
context it, which these actions occurred. Environmental factors such as the
news reports on crimes, the proximity of the crimes to her neighborhood, the
information from her uncle, the look and feel of the gun, the feedback from the
environment from her shots hitting the target, and the time lapses and place
changes between the events described, are necessary for understanding the case
but are quite sterile when discussed independently of Barbara’s cognitive,
affective and behavioral events.
Thus, even for a simple
description of a consumer purchase, all three elements affect and cognition,
behavior and environment work together to provide efficient, useful knowledge
of consumer behavior. All three are also necessary for academic attempts to
understand consumers and for managerial attempts to develop successful
marketing strategies. Analyses of all three elements are superior to any one or
two of the elements taken in isolation.
Finally all three
elements of the wheel are needed to understand not just a gun purchase by an
individual consumer, but also society’s views and uses of guns, the gun
industry and various target markets for guns and various brands and models.
Whether one is developing a marketing strategy to sell guns or legislation to
stop the sale of guns, analysis of consumer affect and cognition, behavior and
environments is required for effective action.
Summary
In this chapter, we
presented our overall framework for the analysis of consumer behavior. We also
described a general approach to developing marketing strategies intended to
influence consumers affect and cognition, behavior and environments. We believe
this framework can help you understand many of the complexities of consumer behavior.
However other concepts related to consumer behavior must be considered. Later
in this text, we will present many of these concepts and discus how they can be
used to develop, select and marketing strategies.
Key Terms and Concepts
Affect
Behavior
Cognition
Environment
Marketing strategy
Reciprocal system
Review and Discussion
Questions
1. Explain
consumer affect and cognition, behavior and environment. Why do marketers need
to consider all three in developing strategies?
2. Explain
the relationship between consumer environments and marketing strategy?
3. Why
marketing strategies ultimately influence overt consumer behavior in order to
be successful?
4. What
are the implications of viewing consumer processes as a reciprocal system?
5. Explain
four levels at which consumer analysis can be conducted. Offer one example of
how consumer analysis could aid marketers at each level?
6. Offer
three examples of how a change in a marketing strategy led to changes in your
affect, cognition, behavior and environment?
7. In
considering answer to Question 6, do you think there was anything unethical in
the marketing strategies?
8. Look
up information on aging in the United States at the census Web site, http://www.census.gov.
What changes are taking place in the age of the population in general and in
racial, ethnic and gender groups? For what levels of consumer analysis would
this information be useful?
Marketing Strategy in Action
Subway Sandwich Shops
FredDeLuca was looking for a way to earn enough
money to pay his tuition at the University of Bridgeport, where he was majoring
psychology. Backed by a partner and a check for $1,000 the 17 year old rented a
small store in downtown Bridgeport, Connecticut, for $ 165 a month. He built a
small take out counter and began selling what he called “subs” those tunnel
shaped sandwiches, also known as heroes, grinders, poor boys, hoagies,
depending on what part of the country you are from. The first subway store got
off to a flying start. So many people showed up on opening day that DeLuca had
to hire people waiting in line for subs to help him make the Sandwiches. The
store sold out its provisions within hours.
After sixth months, however the store was losing
money. Instead of closing, DeLuca and his partner opened a second store to
create the illusion of success. Within a year there was three stores and
business started to pick up.
By 1973 there were 16 stores. At this point DeLuca
and his partner decided to sell Subway franchises: by 1978 there were 100
stores. By 1982 there were 200 stores and DeLuca set a goal of 5000 stores by
1994 he achieved this goal by 1990. By June 8 1993, Subway operated 7,825
stores and was rapidly becoming the largest chain in the world behind
McDonalds. Subway management believes that the franchise can expand to 12,000
to 15,000 stores worldwide.
Subway’s rapid growth has not been without problems.
Some Subway franchises have complained that the DeLuca has glutted certain
markets, making it difficult for them to make healthy profits or even stay in
business. DeLuca says the average franchisee makes a profit of between $40,000
and $50,000 a year. He says only about 1 percent of the stores fail.
From Subway’s Success fast food chains have gleaned
a simple message: Consumers perceive submarine sandwiches to be a fresher more
healthful alternative to burgers and fried foods. Thus a number of fast food
chains have started offering submarine sandwiches as part of their menu and
other submarine chains, such as Blimpie and Cousins subs are spreading to new
markets.
Subway however has a number of points working in its
favor. First consumers equate it with submarine sandwiches, which they perceive
as healthy. Second, Subway has the advantage of being nation wide it can
advertise nationally and it offers the same menu in all of its stores so that
consumers know what to expect when they see subway stores. Third, Subway
recognizes the importance of offering good value to consumers. For example, it
cut the price of its best selling sandwich; the turkey based Cold Cut Combo
from $1.89 to $1.69. By making the combo with thinner slices of meat Subway was
able to cut the price again to $1.49 sales of sandwich rose to record heights.
Fourth Subway management has demonstrated good
marketing abilities. For example, it offers a stamp for each submarine
purchased to be placed on a “Sub Club” card. After the customer has bought 12
subs, the card can be redeemed for a 6 inch sub. Twenty four stamps get the
customer a foot long sub. This is a useful tactic for developing store loyalty.
Discussion Questions
1. Based
on the case information and your personal experiences, list at least five
things you know about Subway. This list offers you some idea of your cognitions
about this restaurant chain.
2. Based
on the case information and your personal experiences, list at least five
things you like or dislike about Subway. This list gives you some idea of your
affect for this restaurant chain.
3. Based
on your personal experiences in buying submarine from subway (or a purchase in
another fast food restaurant if you haven’t been to Subway), list at least five
behaviors you have performed in making purchase. This list gives you some idea
of the behaviors involved in purchasing from a fast food restaurant.
4. Based
on the case information and your personal experiences, list at least five
things Subway has done in the environment to influence consumers to purchase
subs. This list gives you some idea of how the environment influences
cognition, affect and behavior.
5. Write
a brief description of a purchase you have made from Subway (or another fast
food restaurant if you haven’t been to Subway). Did the purchase involve
cognition, affect, behavior and the environment?
6. Visit
Subway’s Web site at http://www.subway.com.
Do you think it has good Web site? Why or why not?
Source:
John P.Cortez, “Subway Builds Its Way to No.2, “Advertising Age July 5, 1993,
p.32; John Birmingham, “what now?” Restaurant Business, July 20, 1992, pp.
80-88; Denise Lavde, “Owner: Subway Become Giant “By Accident,” Wisconsin State
Journal, July 11, 1993, p 1E+; http://www.subway.com.
